GBP/USD : Break Higher

(Tue, 9 Feb 2021). GBP/USD is looking strong, breaking above its January high and reaching its highest level for almost three years. From a technical perspective it is therefore in a good place to breach psychological resistance at the 1.40 “round number” and eventually reach the high above 1.4375 last seen in April 2018.

Sterling has benefited from the positive tone in the markets based on the prospect of a large US fiscal stimulus package and positive coronavirus vaccine news. That has lifted US stock indexes to record highs, with the so-called reflation trade weakening the US Dollar but boosting currencies like GBP, EUR and AUD, as well as gold and oil.

Inflation is now seen as a potential concern when the global economy recovers from the Covid-19 pandemic, suggesting that central banks, including the Bank of England, will have to tighten monetary policy as their economies expand.

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